Personal Finance: Statute of Limitations on Credit Card Debt in California

A valid lawsuit must be filed in a timely manner, close to the disputed event. The basic principle is that the statute of limitations protects the defendant from lawsuits after all the relevant evidence is stale (documents are missing, and witnesses have forgotten events), and the parties need to just move on. Debtors can fail to pay their credit card debt, and if the creditor does not sue within the statute of limitations, the debtor can defend any lawsuit to collect the debt—even if the debt is otherwise valid. In California, this statute of limitation is four years.

Debtors should make a good faith effort to pay their bills, and most do. However, debtors can also get into a situation where they are unable to pay their bills, despite good faith efforts to do so. Before delaying a wait-them-out strategy, a debtor needs to understand the full picture. Here are some important details:

  • Creditors can always sue before the statute of limitation expires. Once a lawsuit is filed and the debtor is served with the lawsuit, time is on the creditor’s side. If the debtor does not defend the lawsuit in time, the creditor can obtain a default judgment—and the original statute of limitations will no longer apply. A creditor can collect a judgment for years.
  • The statute of limitation is only an affirmative defense to the creditor in a lawsuit. Even if the debtor has a valid statute of limitations defense, the creditor can prevail on a lawsuit if the statute of limitations defense is waived (because, for instance, the debtor does not defend the lawsuit in a timely fashion).
  • The statute of limitation is not a discharge of a valid debt. The debt still exists, but debtor can prevent the creditor from collecting it through the courts.
  • Since the debt still exists, the creditor still has the right to seek payment by calling and sending bills as long as they comply with state and federal debt collection laws.
  • Since the debt still exists, the creditor can still report it as a delinquency to credit bureaus, as long as they comply with state and federal debt collection and credit reporting laws.

Additionally, actions by the person owing the money could reset the clock, allowing the creditor to successfully sue.

In managing credit card debts that are in collection, it is important to understand whether the statute of limitations gives you an affirmative defense. However, this may be only one piece of a complicated personal and legal situation. Assuming that the statute of limitation completely closes the matter could be a mistake.

For cases involving multiple creditors, disputes, and other complicating factors, legal representation may be needed. Please contact us to discuss your case.

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The Federal Trade Commission Enforces Marketing Standards for Learning Games

Lumos Labs, the makers of brain games Luminosity, was fined two million dollars by the Federal Trade Commission for deceptive marketing. In the filing, they brought issues to the forefront regarding claims that games and apps that are designed as learning tools actually work to improve learning, IQ, or cognition.

If a company is saying in their marketing that games or apps have a scientifically proven effect on learning or cognition, that statement has to be backed by science that is valid. “Scientifically proven” has to be by currently valid methods of science.

Anecdotal data collection–having people give their experience with a program–is considered to be science, but in a supporting role. Anecdotal data can support other science. Alone it does not have enough scientific validity to support a marketing claim that a product works. Of particular concern is anecdotal data, also known as customer testimonials, that are solicited in such a way that the veracity of the claim is questioned.

Soliciting customer testimonials with the opportunity to win money or prizes means that the information being gathered has a high likelihood of being skewed. It cannot be considered valid scientifically when something to gain is offered in exchange for making the claim. These testimonials or other forms of endorsement can be used to support marketing, but disclosure is required if the endorsement or testimonial was paid for or otherwise compensated.

While learning games have a great potential and a large market, makers must use caution in their claims about how the games work and what they can do. Valid science takes time and is expensive, but marketing cannot make claims about a product unless the science backs them up.

For more information on agency litigation, please contact us.

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Legal Challenges to the Consumer Financal Protection Bureau

The Consumer Financial Protection Bureau (CFPB) is a federal government agency charged with consumer protection in the financial sector. It was developed and staffed as part of the Dodd-Frank Act, and came about as the result of the financial malfeasance that caused the global financial meltdown of 2008.

Two of the provisions of the agency removed much of the pressure other federal agencies face from lobbyists and politicians: agency funding comes from the Federal Reserve, rather than Congress, and the Director, once appointed by the President, can only be removed for cause.

A Federal Appeals court ruled that the structure of the CFPB was unconstitutional, as it gave the agency power to operate without the checks and balances of a three-part federal government system. They offered a solution: put the agency under the power of the President and the Executive Branch, and change the Director’s position to one that could be appointed and removed by the President. The agency is appealing the court decision.

Many critics of the Dodd-Frank Act and the CFPB have cited the power of the director to act autonomously. Pressure to change the structure of the bureau to a 3 or 5 person committee, such as is used in other consumer watchdog groups like the Federal Trade Commission and the Securities and Exchange Commission, exists in Congress. But these agencies are notorious for being bogged down in bureaucracy and for bending to the will of Congress, who holds their purse-strings.

The Dodd-Frank Act is also under pressure, and has been the target of several federal lawsuits brought by states against the government, claiming the law gave unchecked power to the government to oversee the financial services sector, and was unconstitutional. The several lawsuits have been struck down for lack of standing. The transition team of the newly elected president has vowed to dismantle Dodd-Frank as soon as possible.

For more information on agency litigation, please contact us.

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How Long Does a Foreclosure Stay on Your Credit Report?

Nobody chooses to fall behind on their mortgage payments. The loss of a home to foreclosure is emotionally devastating. It’s typically the result of circumstances beyond your control such as loss of a job, loss of wages due to a serious injury or long-term illness, or another of life’s unwelcome misfortunes. Most of the time, a foreclosure is unavoidable, and leaves people worried about their future credit worthiness. One of the most common questions for people facing foreclosure is “How long will a foreclosure stay on my credit report”?

The answer is that a foreclosure stays on your credit report for 7 years. However, its effects lessen as the years pass, as you take steps to reestablish your credit.

How Will Your Post-Foreclosure Credit Report Affect You?

Unfortunately, most people don’t realize how much their credit score affects ordinary aspects of their daily lives. For example, your credit score is often used

  • By potential employers, to weed out candidates with low scores
  • By insurance companies, to set rates and even to deny people coverage
  • By utility companies who tend to charge hefty security deposits if your score is low
  • By landlords, to screen potential renters (Frequently, this is an unwelcome surprise for people who have lost their home due to foreclosure only find this out when they’re trying to find a new living arrangement.)

What Can You Do to Fight Back?

The first thing to do is to start immediately to begin the process of rebuilding your credit. You’d be surprised how many credit card providers will approve you for a high-interest card very soon after a foreclosure or even after bankruptcy proceedings. Use the card for small purchases, and pay the balance back each month in full to start reestablishing good credit.

Consult with a lawyer who specializes in foreclosures, bankruptcies and class action lawsuits. It’s not uncommon to have a foreclosure removed from your credit report if the bank makes an error, including “rubber stamping” foreclosure documents or not following proper procedure.

For these reasons, it makes sense to at least consult with a lawyer to see if there might be a remedy for your case. If you’re a California homeowner or business owner who’s facing foreclosure, or who’s property has already been foreclosed, Call Preston Law at (415) 842-4666 for a free consultation.

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How Do You File A Class Action Lawsuit In California?

When a product is defective or advertising is misleading, causing a loss of money or other form of damages, you might think that you have no real recourse if the company doesn’t voluntarily make it right. The cost of taking them to court would simply far outweigh any potential reward in most of these cases.

The class action lawsuit was developed just for situations like this. It allows many individual plaintiffs who suffered from the same defective product or service to pool their claims together under one team of attorneys. Since a successful class action lawsuit usually means a considerable judgment or settlement sum, attorneys who specialize in these cases will take them on at no cost to the plaintiffs if they feel the case is solid.

How To Start A Class Action Lawsuit In California

If you feel that the product or service you had an issue with is likely to have had some negative impact on at least 20 or so other people, you are a good candidate for a class action lawsuit. The courts don’t set a minimum requirement, but it’s very unlikely they’ll certify the case with less than 20 people involved, and a “slam dunk” number would be about 50 or more.

Class action lawsuits are initiated by a lone claimant, known as the “lead plaintiff.” When a court certifies the lead plaintiff’s class claims, all the class members with those claims will be treated in the same way: if the lead plaintiff establishes the defendant is liable, the defendant is also liable to all the class members. If the defendant prevails against the lead plaintiff, all the class members’ claims will fail. Like most civil litigation in America these days, the parties commonly settle class actions. The settlement usually releases the class claims of the lead plaintiff and the other class members in exchange for compensation. Courts closely supervise class action settlements, to ensure the class members get a fair deal. Lead plaintiffs may have some extra responsibilities, such as testifying in court or being interviewed by the lawyers handling the case, but also generally get an incentive award approved by the court supervising the case.

The services of an experienced attorney are vital in initiating a class action lawsuit. If you feel you have a good case, the first step is to contact our law offices for a free, no-obligation review of your case. If we take on your case, you won’t pay anything unless there’s a judgment or settlement in your favor.

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Collection of Facial Images for Facial Recognition Software Development: Challenges from Consumers

Newly developed facial recognition software is being used in biometric security, retail tracking, robotics, machine learning, law enforcement and government, and many other applications. The technology was developed, among other means, by collecting images of faces when people were playing video games online via their computer webcams. The images of faces were stored and then, when enough faces were collected, machine learning platforms studied the images to develop various applications, including facial recognition.

Take-Two Interactive Software, a large and successful video game company, asked the New York Federal court to dismiss a recent lawsuit brought by video game players, because no actual harm came to the players whose facial images were collected and stored. Attorneys cited the privacy violation as a simple statutory violation, which was not enough, in the absence of harm, to proceed with the lawsuit. The decision is still pending.

Facial recognition, both collecting images and using them in computer applications, is largely unregulated. The Commerce Department tried to begin talks between trade groups, industry, and privacy advocates last year in an effort to come up with voluntary standards, but the effort failed badly.

At this time, facial images can be collected without personal consent whenever a person enters a public space or a private space not his own. Stores routinely use security cameras, and there are no restrictions on how they can use, store, and sell the images collected. Surveillance and image tracking is becoming routine in the hospitality and retail industries.

Large data brokers are collecting and storing personal data, including facial images, not for security but for marketing. The use of facial recognition, geo-fencing, and other tools that identify people by age, gender, social class, preferred activity, shopping behavior, and other variables are designed for marketers to sell that data to business. At this time, no regulations appear to be in the works to prevent personal data, including pictures of our faces, from being sold as an information commodity.

For more information on private litigation, please contact us.

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Ten Strategies for Stopping Robocalls

RobocallsAnyone who has received repeated robocalls—or recorded sales calls—know how annoying and frustrating it is. Although registering one’s number on the Do Not Call Registry can get rid of many unwanted phone calls, it does little for robocalls. The federal Telephone Consumer Protection Act prohibits companies from using robocalls unless the consumer has given written permission for the caller to call. With respect to wireless phone numbers, any unsolicited non-emergency robocall is illegal.

Even though the Federal Trade Commission (FTC) and the Federal Communications Commission (FCC) have clamped down by investigating and stopping companies that continue to use robocalls, increasingly sophisticated technology has made it easier for businesses and scammers to continue this harassment.

So how can you stop or, at least, reduce robocalls? Here are ten tips.

Enroll all of your phone numbers on the Do Not Call Registry. Registration is free, and, once enrolled, your number stays on the list indefinitely.

Do not answer the call.

Robocall machines can detect when a call is answered, which the caller proof that your number is good—and that may increase the volume of calls.

Talk with Preston Law Offices about how to gather evidence for a lawsuit.

Preston Law Offices has extensive experience litigating consumer claims and especially TCPA claims. The new wave of robocall technology has made investigating companies that violate the TCPA much harder, so work with an experienced lawyer from the start to follow the money trail back to companies who profit from TCPA violations.

Don’t give out your number to any business unless necessary. You can get a telephone number from Google Voice, which provides a lot of options for screening calls.

Tell companies with whom you have done business to stop calling you. Notate the date of the request, the person with whom you have spoken, and notify the FTC if these calls do not stop.

File a complaint with the FTC and the FCC.

Use a free service that blocks all robocalls like Nomorobo. With simple information such as your wireless carrier and email address, the tool uses algorithms to identify and block robocalls. Currently, however, Nomorobo is only available on certain VoIP providers in the United States.

Set up anonymous call rejection. This is a free landline and wireless number feature for most phone companies that automatically blocks any calls from numbers with blocked caller ID information.

Purchase a robocall-blocking device that plugs into a landline’s phone line and permits you to blacklist unwanted numbers and whitelist acceptable ones.

Obtain a cell phone app like Truecaller or PrivacyStar that screens and blocks incoming robocalls to your wireless number.

For more information, please contact Preston Law Offices. We can help.

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Debt Collection in California: What is the Statute of Limitations?

Statute of Limitations CA

Under California law, debt has a statute of limitation. The length depends on the type of debt and the creditor.

Claims for breach of written contract—which includes normal consumer debt, like credit card debt—has a four year statute of limitations. Cal. Code Civ. Proc. § 337. Debt collectors are required under California law to tell the person contacted if the statute of limitations has passed on their debt. If the account has had recurring payments, the four year time limit starts with the last payment. (Cal. Code Civ. Proc. § 337(2).)

If the debt is the result of an oral contract, such as a handshake agreement to buy something for a specific price, the statute of limitations is two years. Cal. Code Civ. Proc. § 339.

If you have debt related to property damage, such as from a property you have been renting, the limit is three years for the debt to be collected. Cal. Code Civ. Proc. § 338.

Even when the statute of limitations is up, the debt can still show up on your credit report. Unpaid debts generally stay on a credit report for seven years. 15 U.S.C. § 1681c.

For more information on the statute of limitations on debt collection in California, please contact us.

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Crushing Student Loan Debt: A Top Consumer Problem

There are many consumer problems in America today. Younger consumers are also facing the crushing burden of student loan debt. According to MarketWatch, Americans have a total of $1.2 trillion student loan debt which is racking up by $2,726.27 every second. Combine these figures with the appalling statistics that 70% of students are graduating from college with debt, and 40 million Americans are saddled with outrageous student loans, and it’s clear to see why this is a real problem for Americans and the economy.

Exorbitant student loan debt prevents consumers from buying homes and cars, or starting a family. That prevents economic growth generally. Improperly-structured loans have left students with impractical monthly payments that look more like a mortgage payment. Many Americans can’t make these payments at all, and even the ones that can are barely paying down the debt because of astronomical interest rates. According to the Wall Street Journal, roughly 43% of student loan borrowers are behind or not making payments.

This is compounded by the fact that most Americans with student loan debt took on that debt in order to advance their career. Some educational institutions made false or misleading representations about average starting salaries and graduate employment rates, but left their students with a diploma that amounts to little more than a worthless piece of paper—despite having a degree, these graduates haven’t been able to start a career that pays enough to afford their student loan payments. They decided to take out student loans believing that after graduation they would find a lucrative job (often based on the schools’ representations and marketing), but have not been able to do so. For-profit schools have been blamed for running up student loan debt in particular.

Student loan debt requires serious attention. There are many loan repayment and loan forgiveness programs, but it is clear they are not adequate to address the situation. For some Americans, it is nearly impossible to repay their student loans under the current repayment plans. This problem not only affects individual consumers, but also the American economy. Even cutting interest rates will not help in many cases—it may be necessary to majorly restructure the entire student loan repayment system to increase the repayment period and modify interest rates in order to create affordable monthly payments. The problem is made worse by the fact that student loan debt cannot be discharged in bankruptcy

unless excepting such debt from discharge under this paragraph would impose an undue hardship on the debtor and the debtor’s dependents.

11 U.S.C. § 523(a)(8). Likewise, many student loans are subject to the Federal Debt Collections Practices Act, which can make things much more difficult for debtors.

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Consumer’s Rights to Access to Information

Controlling the collection and disclosure of information is important, but consumers’ access to data about them held by private actors can often be equally important. The European Union provides a broad right of access under Article 10 of the Data Protection Directive 95/46/EC. In contrast, the US does not have generally-applicable consumer privacy law with the same broad scope as the DPD. The US does have a few statutes that empower consumers rights to access their data. The Fair Credit Reporting Act (15 U.S.C. §§ 1681-1681x) provides that “every consumer reporting agency shall, upon request, and subject to section 1681h(a)(1) of this title, clearly and accurately disclose to the consumer . . . [a]ll information in the consumer’s file at the time of the request[.]” 15 U.S.C. § 1681g(a).  In turn, the term “file” means “all of the information on that consumer recorded and retained by a consumer reporting agency regardless of how the information is stored.” 15 U.S.C. § 1681a(g). This goes well beyond the ordinary credit reports the credit reporting agencies typically pass out. But the FCRA is fairly limited, in that it only applies to credit reporting agencies. The Dodd-Frank Act provides consumers a much broader right to access their personal data:

A covered person shall make available to a consumer, upon request, information in the control or possession of the covered person concerning the consumer financial product or service that the consumer obtained from such covered person, including information relating to any transaction, series of transactions, or to the account including costs, charges and usage data. The information shall be made available in an electronic form usable by consumers.

Dodd-Frank Wall Street Reform and Consumer Protection Act, Pub. L. No. 111-203, § 1033, 124 Stat. 1376, 2008 (July 21, 2010) (codified at 12 U.S.C. § 5533(a)). There are some important limitations here, but the Dodd Frank Act defines a “covered person” as “any person that engages in offering or providing a consumer financial product or service,” which covers a long laundry list of products and services: most consumer loans, real estate settlement services, taking deposits, transmitting or exchanging funds, acting as a custodian of funds or any financial instrument, selling, providing, or issuing stored value or payment instruments, check cashing, check collection, or check guaranty services, providing payments or other financial data processing products or services to a consumer, and/or debt collection. See 12 U.S.C. § 5481(6), (15). The Communications Act provides consumers a right of access to their telecommunication data: “[a] telecommunications carrier shall disclose customer proprietary network information [CPNI], upon affirmative written request by the customer, to any person designated by the customer.” 47 U.S.C. § 222(c)(2). (This can be particularly important for consumers dealing with “spoofed” calls, as CPNI includes call detail reports (or call detail records) which can help trace back some spoofed calls to the genuine originating telephone number when regular billing records and caller ID fail.) Finally, the Communications Act also provides consumers a right to their cable data: “[a] cable subscriber shall be provided access to all personally identifiable information regarding that subscriber which is collected and maintained by a cable operator.” 47 U.S.C. § 551(d).

We need to exercise these rights or we lose them. Contact us if you’ve been denied your right to access your information.

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